UK Pension Transfer FAQ

Have you lived or worked in the UK? If so you may have pension benefits still held in the UK and are entitled to a UK Pension entitlement. Need help with moving your UK pension to Australia? Please find below answers to some common questions. Let PTS find out your current transfer value now!

Contact us now for a no obligation consultation regarding moving UK pensions to Australia.

Pensions held in the UK can be held in a Defined Benefit or Defined Contribution scheme.

What is a transfer value?

UK defined benefit schemes use an actuary to calculate your UK pension transfer.  They convert the amount of pension you have accrued into a cash equivalent UK pension transfer value.

UK defined contribution schemes use the current value of your fund accrued as your UK pension transfer value.

In both cases the UK pension transfer is full and final settlement of the benefits you have accrued within the scheme and releases the scheme of all liability for your membership.

Is the transfer value amount guaranteed?

UK defined benefit schemes are based on complex formulas, as such transfer values are guaranteed for a period of 3 months from the date of calculation.

UK defined contribution schemes use the current value of your fund and are therefore unable to provide a guaranteed value.

Are there restrictions on where I can transfer my pension to?

In order to protect members UK Pension Transfers can only be made to an approved scheme.  Approval for schemes is made by HMRC and receiving schemes need to prove they meet certain requirements.  Once this has been done schemes are given Recognised Overseas Pension Status (ROPS)

The UK recently introduced a 25% tax deduction on transfers requested after 9 March 2017.  This charge only applies to transfers made to QROPS schemes whereby the QROPS is based in one country and the individual is resident in another. ie A transfer to a New Zealand QROPs and you live in Australia.

How is pension income from the UK treated in Australia?

Any income you receive from the UK would be subjected to constantly fluctuating exchange rates.   If you draw the pension and lump sum from the UK it will be added to your earned income and taxed at your highest marginal rate.

This income will also be included in the test that determines how much Age Pension you receive from CentreLink.

In the event of my death, what happens to my UK fund?

If you were to die whilst your benefits remain in the UK the amount payable to a spouse or dependent would depend on the rules of the scheme.

In general a scheme would pay a spouses pension equivalent to 50% of your original benefit. In addition, a refund of the contributions you made to the scheme would be payable if you died before retirement.

Some more generous schemes allow the spouses pension to be payable to dependent children but it would generally cease to be payable after they reach the age of 21.

What happens if I were to die and my money is invested in superannuation?

The entire investment fund can be paid either as a lump sum or income which would generally be tax free.

Is there a limit on how much I can transfer to a superannuation fund?

Yes, we are specialised in UK pension transfers, calculating growth and transferring your UK funds within the contribution caps.

What are the costs of transferring my UK pension?

We conduct research into your UK fund and provide a free, no obligation consultation which outlines all associated costs of the transfer.

TRANSFER EXAMPLE:

Pension to remain in UK

A client aged 48 moved to Australia in 2011 with his family.  He worked for a large retail chain in the UK for 10 and ½ years.

His current preserved pension in the UK scheme amounts to £4,000.00pa. His equivalent transfer value is £134,000.00.

If the client were to die prior to reaching his retirement age the UK scheme would provide his spouse with a pension of $2,000.00 each year.  This pension would be subject to exchange rates and be taxed in Australia. A refund of £7,800 in respect of the contributions the client made to the scheme would also be payable.

UK Pension transferred

The client’s funds are now in superannuation and are invested in a balanced portfolio.

Should they die prior to retirement age his dependents would receive a lump sum of the current value of the super fund, free from tax.

The fund is now invested in a tax efficient environment and the client has the freedom to draw as much income from the fund as he wishes free from tax once he reaches preservation age.

TRANSFER EXAMPLE:

Mr Jones, aged 48, moved to Australia in 2011 with his family.  He worked as an electrician in the UK prior to moving to Australia where both he and his employer paid into a Personal Pension scheme which he now wants to transfer into his super.

Mr Jones has $200,000 invested in his pension plan.  If Mr Jones transferred his fund to a ROPS and achieved a 5% investment return to age 65, his fund would be worth $284,216.

In addition, Mr Jones would have also improved the death benefits available to his family and eliminated exchange rate fluctuations on any income drawn in retirement.

If you require any further information then please call the Pension Team on (08) 9233 9269 or  Contact Us

 

Final Salary Pension Schemes Important changes

With effect from 6th April 2015 it is no longer possible to transfer a NHS, Teachers and Police pensions.   To keep up to date with changes with UK pensions please ensure you regularly view our News Page.

  


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